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Court gives state retirees hope of pay hike

Retired state workers won a court battle Thursday in their fight to get their automatic cost-of-living increase back.

That happened when the Colorado Court of Appeals ruled that their case against a 2010 state law that took away their automatic 5 percent COLA increase violated a contractual agreement made to them when they signed up for the state worker pension plan under the Public Employees’ Retirement Association. The recent recession had a devastating impact on those pensions, threatening PERA’s long-term solvency.

As a result, the Colorado Legislature passed a slew of changes to benefits offered to PERA members. One was the automatic COLA increase to retirees regardless of what happens in the economy.

Several PERA retirees sued the state, but Denver District Judge Robert Hyatt dismissed it, saying the Legislature had a right to alter the COLA increase.

“While plaintiffs unarguably have a contractual right to their PERA pension itself, they do not have a contractual right to the specific COLA formula in place at their respective retirement, for life without change,” Hyatt wrote in dismissing the case.

A three-judge panel of the court disagreed, to a point. In its ruling Thursday, the higher court said the state could only reduce the increase if it can show a “public need” to do so.

“The (district) court must still determine whether any impairment of the right is substantial and, if so, whether the reduction was reasonable and necessary to serve a significant and legitimate public purpose,” Judge Jerry Jones wrote in the ruling. The decision, which sends the case back to Denver District Court, was joined by judges Dennis Graham and Diana Terry.